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Accounting Standard 10 (AS 10) is issued by the

Institute of Chartered Accountants of India on'Accounting for Fixed Assets'.

(AS 10)is recommended for use by companies listed on

a recognised stock exchange and other largecommercial, industrial and business enterprises in thepublic and private sectors.

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is an asset held with the intention of being used forthe purpose of producing or providing goods or services and isnot held for sale in the normal course of business

is the price that would be agreed to in anopen and unrestricted market between knowledgeable andwilling parties dealing at arm's length who are fully informedand are not under any compulsion to transact.

of a fixed asset is its historical cost or otheramount substituted for historical cost in the books of account offinancial statements. When this amount is shown net ofaccumulated depreciation, it is termed as net book value.

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Fixed assets often comprise a significantportion of the total assets of an enterprise,and therefore are important in thepresentation of financial position.

The Determination of whether anexpenditure represents an asset or anexpense can have a material effect on anenterprise's reported results of operations.

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This statement does not deal with accounting for the following

items to which special considerations apply:

Forests, plantations and similar regenerative natural resources.

Wasting assets including mineral rights, expenditure on the

exploration for and extraction of minerals, oil, natural gas and

similar non-regenerative resources.

Expenditure on real estate development.

Livestock.

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An enterprise may decide to expense an item whichcould otherwise have been included as fixed asset,because the amount of the expenditure is not material.

Stand-by equipment and servicing equipment arenormally capitalized.

Machinery spares are usually charged to the profitand loss statement as and when consumed.

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Fixed assets acquired in exchange or in part exchangefor another assets, the cost of assets acquired shouldbe recorded either at fair market value or at the netbook value of the assets given up.

Material items retired from active use and held fordisposable should be stated at the lower of their netbook value or net realizable value and shown

separately in the financial statements.

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The cost of an item of fixed asset comprises of :

Note: Any Trade Discount and Rebates are deducted in arrivingat the Purchase Price.

Purchase Price *****

Add: Import Duties *****

Other Non-Refundable Taxes *****

Directly attributable Costs to Asset *****

*****

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:(i) site preparation;

(ii) initial delivery and handling costs;

(iii) installation cost, such as special

foundations for plant;

(iv) professional fees, for example fees of

architects and engineers.

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When a fixed asset is acquired in exchange foranother asset, its cost is usually determined byreference to the fair market value of the considerationgiven.

When a fixed asset is acquired in exchange for sharesor other securities in the enterprise, it is usually

recorded at its fair market value, or the fair marketvalue of the securities issued, whichever is moreclearly evident.

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It is difficult to determine whether subsequentexpenditure related to fixed asset representsimprovements that ought to be added to the grossbook value or repairs that ought to be charged to theprofit and loss statement.

The cost of an addition or extension to an existing

asset which is of a capital nature and which becomesan integral part of the existing asset is usually addedto its gross book value.

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Sometimes financial statements that are otherwiseprepared on a historical cost basis include part or allof fixed assets at a valuation in substitution forhistorical costs and depreciation is calculated.

The revalued amounts of fixed assets are presented infinancial statements either by restating both the grossbook value and accumulated depreciation so as to give

a net book value equal to the net revalued amount.

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An increase in net book value arising on revaluationof fixed assets is normally credited directly to ownersinterests under the heading of revaluation reservesand is regarded as not available for distribution.

A decrease in net book value arising on revaluation offixed assets is charged to profit and loss statement

Different bases of valuation are sometimes used in thesame financial statements to determine the book valueof the separate items within each of the categories offixed assets or for the different categories of fixedassets.

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Items of fixed assets that have been retired from activeuse and are held for disposal are stated at the lower oftheir net book value and net realizable value and areshown separately in the financial statements.

The amount standing in revaluation reserve followingthe retirement or disposal of an asset which relates to

that asset may be transferred to general reserve.

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In term of Hire purchase legal ownership does not vestin the enterprise,

, which if not readily available, is calculated byassuming an appropriate rate of interest.

They are shown in balance sheet.

Where an enterprise owns fixed assets jointly theextent of its share in such assets, and the proportion inthe original cost,

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Goodwill; As a matter of financial prudence, goodwillis written off over a period. However, manyenterprises do not write off goodwill and retain it asan asset.

Patents; Patents are normally written off over their

legal term of validity or over their working life,whichever is shorter.

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Certain specific disclosures on accounting for fixedassets are already required by Accounting Standard -1on 'Disclosure of Accounting Policies' and AccountingStandard6.

Further disclosures that are sometimes made infinancial statements include:

(i) Gross and net book values of fixed assets at thebeginning and end of an accounting period showingadditions, disposals, acquisitions and other movement.

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(ii) Expenditure incurred on account of fixed assets in

the course of construction or acquisition.

(iii) Revalued amounts substituted for historical costs offixed assets, the method adopted to compute therevalued amounts, the nature of any indices used, the

year of any appraisal made, and whether an externalvaluer was involved, in case where fixed assets arestated at revalued amounts.